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Home My WebLink AboutMinutes 09/29/1997~09 September 29, 1997 Vo1.31, Page fl 1 Ir'IINU~'ES z OF A ItEGITLA~t 1VIEETIN~ 3 PETAI.UMA CITY COUNCII. 4 MONIDAY, SEPT~IVIBEIt 29, 1997 5 ROY.L CAI,I. 3:00 .m. 6 Present: Read, Keller, Stompe, Torliatt, Maguire, Vice Mayor Hamilton, Mayor Hilligoss ~ Absent: None ~ ~~. a ~'LEDGE OF t~I,I,EG~ANCE 9 Tom Backman led the Pledge of Allegiance to the Flag. io I~OIVIENT OF SII,ENCE i~ P~JBLIC COIVIIVIENT i2 Steven Brunner, 1707 Inverness Drive - brought in a petition from the residents who live in is the Inverness and Lancaster Drive area. They collected 56 signed petitions against the ~4 closure or any blockage of Zinfandel Drive. They are opposed to a temporary closure on is Zinfandel as well as a permanent closure. They asked to be advised when the Council would i6 consider their request. PT said the feeling of the Council was to do a temporary closure to i~ see if traffic increases. We asked staff to look at opening up Colombard and we would look is at opening up Zinfandel at the same time. The feeling of the majority of the Council was to i9 open everything up. This is an issue that will be coming back to the Council. DK noted no 2o action was to be taken prior to a traffic count and a cost estimate. He would like to see that zi done when it comes back to us as a hearing so we can indeed have notice to the zz neighborhood and have it agendized as a proper action item. We are asking for a lot of 23 trouble by closing offZinfandel. Za Allan Tilton told him this was going in as a temporary barrier by the end of next month 2s (October). Please place that on your agenda soon to consider reversing your decision. When 26 that comes back to the Council, the neighborhoods will be noticed. z~ Leonard Stewart, 4358 Chico Avenue, Santa Rosa - County Supervisor Tim Smith is urging Zs regionalization of all treatment and ef~luent disposal. ~Ie supports this. Sonoma County is Zs working on the ability to retrieve ef~luent, pump to the geysers steam field, there to be so converted to steam for geothermal power generation along with the creation of clinically pure si distilled water be piped down the hill for general distribution consumption. Your treatment 3a plant could include sending to the Santa Rosa Laguna Treatment Plant then to the geysers. 33 Tom Backman, 6525 Lakeville Highway - rancher - we all look to use that treated water 34 down here. There are many farmers who are the agricultural base to this community and we 3s all are looking for water. The product should be treated as a commodity. In the long term 36 there is not a farmer here that wouldn't say they are willing to pay for it. Direct your staff to 3~ study the agricultural uses and the possible income from water in the future.. That is a very ss big commodity to this community. Please do not dump that water in the Petaluma River. Key to abbreviations: JH-Vice Mayor Jane Hamilton, NR-Councilmember Nancy Read PH-Mayor M. Patricia Hilligoss, MS-Councilmember Mary Stompe DK- Councilmember David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citizens WastewaterAdvisory Committee SCWA - Sonoma County WaterAgency ~ ~..~. o Page 2, Vol. 31 September 29, 1997 i Harvey Goldberg, Petaluma River South - about a month ago I came here to discuss erosion z in the Petaluma River. It is getting worse and serious. He talked to Gene Beatty and s Michael Evert. He received a phone call and somebody is going to bring in material for his a river banks. He feels that the erosion and related problems are coming from the Marina for s the most part. 6 C'OUNCII, C'OIVIMENT ~ NR the Northbay Association of Realtors held the Blue Print for Sustainable Bay Area s Workshop in Rohnert Park, she brought back copies of their newsletter which was placed in 9 the mailboxes. The Crossings Project in Mountain View that is adjacent to CALTRAIN, io maybe the staff can find a little bit about it for the Central Petaluma Specific Plan and how i i high density development could work next to the rail. The Mayor and I attended HCZ i2 workshop. Survey results were passed out. I would hope when the next _ goals session is is scheduled, she would like to have their survey looked at to set some priorities. Regarding ia economic development, the Chamber of Commerce had a presentation from San Rafael is redevelopment agency regarding how they went through the steps of doing their economic i6 development plan. Congratulations to Fair Isaac of San Rafael who has opened up a i~ commute center at the Marina for their employees. There are over 160 Sonoma County is employees who can stop at this center on the way to work or on the way home or if they are i9 doing half days. This is an innovative way of putting people closer to their workplace. 2o Madam Mayor before the October 20 SCTA meeting she would like brought up when we 2i discussed the two-county plan about potential state and federal funding for the 101 22 improvements south of town. 2s Mary Stompe went to the national conference of Christmas in April, which is an organization ~a which assists people with housing. This year in Petaluma 5 homes were upgraded. Ne~ct year as they hope to assist 15 homeowners. This helps people who are low income, elderly and 26 people with disabilities. There are 204 affiliates to the national organization, who have 2~ helped rehabilitating 31,300 homes. The deadline for the next group of assistance is za November 21. She received the Personnel letter regardin~ the City Manager position. zs People should apply for the Citizens Committee to assist in selsction of the City Manager. 3o DK said the public has not been able to comment on the wastewater issues. He would like 3 i to agendize a block of time for the public so the public can stay involved. s2 CONSENT CAL~NI)AIt s3 The following items which are noncontroversial and which have been reviewed by the City 3a Council and staff were enacted by one motion which was introduced by NR and seconded by 35 ~1. 36 Ayes: Read, Keller, Stompe, Torliatt, Maguire, Vice Mayor I~[amilton, ivlayor Hilligoss 3~ Noes: None 3s Absent: None Key to abbreviations: JH-I~ice Mayor Jane Hamilton, NR-Councilmember Nancy Read PH-Mayor M. Patricia Hil[igoss, MS-Councilmem8er 11~Iary Slompe DK- Councilmember David Keller, PT-Councilmember Pamela Torliatt MM-Councilmem6er Matt Maguire CWAC - Citizens WastewaterAdvisory Committee SCWA - Sonoma Counry WaterAgency ~~i September 29, 1997 Vo1.31, Page 3 1 ~tESO. 97-258 NCS z AC~'ING CI'TY MANAGER s Resolution 97-258 NCS appointing Finance Director David Spilman as Acting City Manager a between the days of September 29 and October 14, 1997, while the City Manager is on s vacation. 6 * * * * End of Consent Calendar * * * * * ~ ~ VVAST~WATER - D~SCUSSIOlv s PROPOSA~S: P1~YCING INFORMA'TION 9 City Engineer Tom Hargis noted these are carryover items from previous meetings when ~o there was not su _fficient time to discuss them. We have been trying to encourage the public to ~ i feel free to comment ori the issue. Maybe we should start setting aside time specifically for ia the public to comment. i3 There has been the desire on the part of some to have the pricing information released. This ~a was brought back for you to discuss whether or not this is the appropriate time, or some is future time, is the appropriate time to release the information. There are several different i6 formats that could be used. Both of the vendor teams had been agreeable to the release of i~ their pricing numbers, which our proposal process required that they keep confidential based ia upon the other vendor's numbers being released. There is some concern now about the i9 Sonoma County Water Agency participating in the process and preparing a"public sector" ao bid and how that may play into the number release. He suggested the two vendors be asked Zi again, under the current scenario, if they are still agreeable to releasing the bid numbers. 22 The Mayor suggested releasing the bid numbers after the Water Agency has submitted its 23 pricing information. NR asked what is the projected date of release of the Rate Payer za Analyst, Mr. Farnkopf, report to the City Council. (October 20 is the current date estimate) zs Staff is pushing the consultant to get the information to the Council. The report is geared a6 towards a review of the agreement terms. tNhether it is necessary to have that information z~ for pricing evaluation and/or selection of vendor, or whether it's appropriate to be used as za part of negotiations with contract modifiers is not known at this time. MM noted there is a 29 message from Farnkopf on the desk torught. 30 ~.ate Documents for Agenda - The Council advised staff, that any documents placed before si the Council on Council meeting day are impossible for the Council to read for that meeting. 32 Another question was, when is there a violation of the bid process and when does the City of 33 Petaluma become at risk in violating the good faith provision of the bid process we are in the 34 17llCiSt O~ ss Karen Hedlund, of Nossaman, Guthner, Knox & Elliot, said all she can advise the Council 36 about the Sonoma County Water Agency bid proposal ~is that we don't know what the s~ Sonoma County Water Agency bid proposal is. We have raised some issues that have been 3s passed on to their counsel. They are looking at the issues. When we get a little more 39 clarification from them and work through these issues further, then we can advise you as to ao whether there are any complications, in terms of our own procurement process that that ai proposal might raise. We would hope to avoid any complications. Key to abbreviations: JH-T~ice Mayor Jane Hamilton, NR-Councilmember Nancy Read PHMayorM.PatriciaHilligoss, MSCouncilmemberMaryStompe DK- Councilmember David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citizens Wastewater Advisory Committee SCWA - Sonoma County WaterAgency '~~~ Page 4, Vol. 31 September 29, 1997 ~ NR would hope the City sticks to its procurement process and avoids complications. If both z vendors are willing to release the number, then she would like to get the bottom line life cycle s cost information. a Suggested FAnal ~'ime Window for Proposals - City Engineer Hargis noted the staff and s consultants met this afternoon and suggested that a date be established when the vendors' 6 proposals would be valid through. There needs to be a time extension. He suggested that ~ date be January 31, 1998. That would give some time to work through the issues, the s Farnkopf report, get the water agency proposal, and keep the process valid with a time we 9 are shooting for. He suggested that if the Council wished to release numbers in some form to io direct staff accoringly. The vendors have not been asked the question about their willingness i i to release numbers before the water agency report comes back. ia JH - She would like to see what each portion value is and would be interested in some kind i3 of pricing information that doesn't reveal all the numbers right away. If we can't tell if the ~a difference is $10 or $10 Million, we are too much in the dark. She would like to spell out the is details about the Sonoma County Water Agency public proposal. She doesn't want price i6 information given out in a way that would create unfair playing field for them. i~ Karen Hedlund - the requirement is that you make a finding, doing it under the Privatization ia Act, the project would be less costly than conventional public financing. It doesn't require i9 that you go out and solicit a public alternative, it leaves it open how you make that ao determination. We submitted a letter that described a possible process for making that ~i determination to the PUC, which specifically talked about doing it based on estimates. That 22 was in January when we thought that was all that we would have. They have not objected to 2s that. They are not interpreting it as requiring that you actually go out and do an RFP under za traditional design/bid/build to find out what the cost might be. ~s MM - if a public agency like the water agency says okay you've gotten a bid, you've got a z6 price, you've got a design we will price that out for you using our funding sources, would 2~ you consider that a more tangible, realistic set of numbers than just an estimate? 2s Karen - if the agency goes out and goes through all the steps to receive real hard bids, z9 something that you could rely on, certainly that would be very helpful. Whether they'll be in so a position to do that is another question. The process they go through to do that is important. 3i MM - if they don't do quite that much, and say they're engineers know how to price these s2 things, we use our best efforts and expertise and come up with a number, would you consider 33 that a valid comparison? 34 Karen - It certainly provides a basis for a valid comparison, but you are going to want to take ss into account not just the base construction price but what the likely price is over 30 years. I 36 believe under the Privatization Act, it is legitimate for you to take into account issues relating 3~ to risk shifting as well. But you have a fixed price under these proposals for 30 years subject 3s to escalators. If you don't have a 30 year operation contract, you are exposing yourself to 39 unknown risks. Key to abbreviations: JH-Vice Mayor Jane Hamilton, NR-Councilmember Nancy Read PH-MayorM. Patricia Hilligoss, MS-CouncilmemberMary Stompe DK- Councilmember David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citrzens WastewatepAdvisory Committee SCWA - Sonoma County Water Agency -- ~ = .~.13 September 29, 1997 Vo1.31, Page 5 i MM - once the city makes that comparison, if it makes the finding that the publicly funded 2 approach, whoever offers it, and however they got to it, is the least cost approach then the s`85 Privatization Act we are beholden to not proceed with one of the privatized approach. a Karen - If you can't make the finding that it's not as cost effective, then you have a problem. s It doesn't mean that have to go with the other proposal. You may not have a hard proposal. 6 The requirement is to make a finding. ~ MM - if that happened and we said this publicly funded presentation certainly seems cheaper a taking into the factors of risk, we could consider that we were back at Square 1 where we 9 were 6 or 8 years ago. We don't want to get ahead of ourselves. If we get the proposal io from the SCWA, and if that bid is found to be significantly less cost to the rate payers, we ii have a certain obligation to proceed forward. SCWA is willing to back up their numbers with ~2 a real proposal. Then we would be coming to the end of Phase 1. He would like to proceed is very cautiously. I~e would like to keep the financing numbers undisclosed in their specifics. ia He is willing to hear the percentages as to how they relate to each other using the fu1130 year is cost to do that. He still feels there should be no full disclosure, so it can be used as leverage ~6 in the competitive process. i~ PT - Regarding the technology and dealing with an apples to apples on the proposal, do we is have that now, do we? i9 Hargis - The concept is Performance Based. Would you build us a plant that meets discharge 2o requirements and what would it cost to have you treat our waste? There are differences m 2i technology between the two vendors, so there could be related cost differences. We don't 22 know that the costs are based on technoYogy or operations or what might cause the 23 differences of cost. aa PT - is staffgoing to be proposing changes in the proposals in the way it is treated, the way it Zs designed, or the way you want or don't want it done? a6 Hargis- we are asking the City Council, consultants and staff making recommendations on a~ decisions on the points of difference. Staff would like to see changes on how the flow is 2s metered from one of the proposals This isn't fully designed. It is a very detailed concept. ~9 There are some things that are very dynamic. so Suggested anethod of action - PT - if we are going to go through a process for changes, the 3i ways of operation that will affect the vendor's cost of service, this can be done only through 32 negotiation. That is one of the reasons we need to have a negotiation process occur before 33 we release the numbers. We need to review the rate payer advacate's analysis. We need to 34 see that information, because that may change the cost. We either select a vendor or both to 3s negotiate a contract. We have to make that decision. Then we would have the final proposal 36 by one or both vendors, then we should review and compare the public model to the pnvate 3~ model, then we should release the pricing numbers showing the following: Based on 2 ss vendors, the original bids, compare the two original bids and any negotiated changes to the 39 original bids, so we see where our base line is and what changed during the negotiation ao process; then we take a look at comparing it to the SCWA public model. It is not going to ai be a fair comparison if we release the numbers prior to having Sonoma County submit their az proposal. T'hen we look at all across the board one, two, three, same model, same project, a3 and then we can make a decision and select at vendor with whom we want enter into 44 contract. Key to abbreviations: JH-Vice Mayor.lane Hamilton, NR-Councilmember Nancy Read PH-Mayor M. Patricia Hilligoss, MS-Councilmember Mary Stompe DK- Counci/rnember David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citizens WastewaterAdvisory Committee SCWA - Sonoma County WaterAgency ~1~ Page 6, Vol. 31 September 29, 1997 i DK - in February, 1994, a decision was made not to seek proposals for a facility which 2 would be owned by the city because it was going to be too complicated. That was a tcagic 3 mistake. I am confused and not very happy about it. There is not enough information a available to us about the two bids to make it comfortable to delegate to staff and/or s consultants to negotiate when he doesn't know what will be traded off and doesn't know 6 what those impacts will be plus now there is a real live publicly owned alternative.. We have ~ spent more money to date than we would have spent if we had built the plant in 1993. He a expressed tus desire to have the numbers released now because he doesn't understand how 9 you can negotiate if you don't know the numbers of the bids. io MS - right now we are in a difficult position, we have half the information we need, but the ii problem is the playing field has changed. Before we were going to have two proposals, and ~2 now there is going to be the form of a third. It is unfair at this point to give out those is numbers, if we want to make the best possible decision. Staff made a recommendation she is ia not in favor of to put this off for another 4 months. We don't have a lot of options. First, is SCWA is submitting to CWAC for review and recommendation to the Council, and they be i6 given a deadline of some time in November. So we can have a deadline of sometime in i~ January. After we have all three proposals, release the figures for all three with that time. is We need to be fair. We were told again tonight that is not part of the Privatization Act i9 regulations, we have to have it reviewed, but we don't have to have a proposal. So she 2o asked the Council to put it on hold until the other proposal is received. There have been a zi variety of changes which should be given Yo the City in writing. The we can look at all 3. 22 JH - Would like to hold off on sharing price until SCWA presents their proposal, then reveal zs price information. We should give them a deadline, choose a vendor and negotiate. za MM - we can't ask for a proposal from the Water Agency at this time because we do not zs have the completed privatization review process and the water agency cannot contribute 26 something without us incurring significant legal liability. z~ JH - we make a decision first on the preferred vendor then, its time to get the public option. 2a NINT - review private proposals; negotiate complete package with price, then when we have zv design and price, then this is compared with the public option. so N1M - both vendors are open to negotiating with us. This City Council has not formally 3~ accepted changes to the bids that have been proposed. There is a law passed in 1996 called 3z 5956 which allows agencies to go through this same process but without this comparison 3s step at the end. At the last meeting we asked our consultants to look into this. Can we use 34 that at a later date if we come to a point where we find a publicly funded comparison cheaper ss and then are prohibited with going with the privatized bids at that point. The pivotal question 36 is that the Charter takes precedence unless it's an issue of statewide import. And if it's of 3~ statewide import, then that takes precedence over the Charter. So I would tend to think that 3s something that is a state law that gives license to public entities could easily be interpreted as 39 having statewide import. Key to ab6reviations: JH-Vice Mayor Jane Hamilton, NR-Councilmember Nancy Read PH-MayorM. PatriciaHilligoss, 11~IS-CouncilmemberMaryStompe DK- Councilmember David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citize»s WastewaterAdvisory Committee SCWA - Sonoma County WaterAgency ., .~~ . . -:i,4 ' , . ~ 115 September 29, 1997 Vo1.31, Page 7 i So what that says is the water agency could if we came to the point that we said to the z vendors thanks for all the help we are all bleeding on the floor together but can't use your s proposal because what we have found is the public approach is cheaper then either the water a agency or we could turn around and say we want to take the work you proposed and do the s same thing. Mr. Farnkopf has said he has some issues that he is gomg to bring up regarding 6 how we have structured these proposal. So we need to hear from lum. Then send the 7 proposals back to the vendors for the last go round. Pick a vendor, negotiate a s configuration, have the water agency give us figures and compare it with that, determine 9 which is best and proceed from there. He would release pricing information when the city io has an agreed upon design. Release the original figures after we have an agreed upon design, ~ ~ release what we have ended up with and then at that point we don't know what the water iz agency has got because they haven't make a proposal they can't propose until we've got a set i3 figure. ia Bill White - CWAC member - this is not a necessarily a straight forward and simple process is like a normal bid is. The city finds itself in an extremely strong position. We have spent a lot i6 of time and a lot of money, approximately $1.3 Million on a process and we haven't dug a i~ hole in the ground. The process that was established that sets forth very clearly the path on ia how to proceed from bid out to project. Councilwoman Torliatt has pretty much hit the path. i9 We should start unraveling the process, because the only unraveling that is going on here is zo the unraveling that is starting to be done by some of you folks. That's the only unraveling of 2i tlus process. One, the City doesn't have much choice legally; Two, we have an incredible z2 opportunity to get one heck of a good price for the citizens of Petaluma. We all sit up here zs and we say for the last 3 years what we want is good rates for the citizens of Petaluma for the za sewer users. If we follow the process that is established, I think we can get this done. We Zs can be finished in 2 or 3 months. If you don't like it at that time and if the public offer comes a6 in at a better price, we can go for another price. 2~ Part of the negotiations is to finalize a technical configuration. Select the vendor, negotiate 2s with the vendor. In that negotiation, we will end up with a technical solution a defined and z9 clearly identified technical soIution and a price. We can then go to the Water Agency to 3o come up with a comparison, and then we will know. It is complicated, but it isn't, if we si follow this process.. 32 Bill White - in revealing price, I used to think when we had negotiations completed. Now 33 with the way the public process has been structured at this time, I don't think it is fair to the 34 two venders to say okay we've gone through the whole thing, here are your numbers, novy 3s tlurd party, I don't care whether it's another vendor or the Sonoma County Water Agency, 36 come in and beat it, after these guys have put in two years. ~'ou can't do tha.t. That's just 3~ not fair. Forget what's legal or anything else. There is no equity there, there is fairness sa there. I just don't see how that can be done. So I would say at tlus point we should not 39 release the price until we have the full system, we have the terms negotiated. ao The one thing that people are forgetting here is the risk thing. The reason in February of ai 1994 the Council went at that time to say that we wanted to try this process was because of a2 the lay-off of risk. The reason the committee has been so firm and so strong in this a3 privatization process through this whole thing is because we see an ideal opportunity to lay- 44 off the risk of 30 years of operations of a multimillion dollar project. That's something that as can't be made light of. Key to abbreviations: JH-I~ice Mayor Jane Hamilton, NR-Councilmember Nancy Read PH-Mayor M. Patricia Hilligoss, MS-Councilmember Mary Stompe DK- Councilmember David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citizens WastewaterAdvisory Committee SCWA - Sonoma County Watertlgency ~. ~ s . , .~~:.; Page 8, Vol. 31 September 29, 1997 i That is major, major factor here. So when I say and the legal consultants say that when we z are looking at a comparison price we doggone well have to put some kind of value on the s fact that we have a cap. There are ways to adjust it by cost of living on certain labor costs a and other things. s This project will make an impact throughout the country. We now have two vendors who see 6 this as an ideal opportunity to make waves for themselves to rnake an impact in this industry ~ throughout the entire country. Getting this contract would be a big advantage to them. They a will try very hard to get in by giving us a good price. 9 DK How would you deal with the Sonoma County Water Agency and' what is their role in io this. ri Bill Wlute - I think the water agency is an excellent choice of somebody to come in and give iz this price. But, I don't know how they can compete in the risk lay-off. Is the City of i3 Petaluma going to be able to lay-off that cost on the voters of Sonoma County the same risks ia that we can lay-off onto U. S. Filter/EOS or Montgomery Uruted Water? I would contend, is No. Or maybe their price is so much lower we can take the rislc on ourselves. i6 DK - Perhaps another way of handling the risk instead of aslcing for a lay-off of the risk on a i~ whole wide range of maybe foreseeable events is to come back to a cost-plus basis for is operating which is to say if the risk happens then the rate payers will have to pick up the tab i9 rather than paying an insurance policy an all risks insurance policy for 30 years whether or Zo not those risks happen. One of the reasons that I need the pricing is to help me determine z~ whether ~or not we have gotten a fair price for that lay-off of risks. Right now I don't have 2z that information zs Bill White I understand that and there is no conceivable way the Council can make a final aa decision without the pricing information. It's just not possible. What you are trading off in zs putting that off to a later date is probably getting a better deal. Regarding cost-plus, I z6 contend that a cost-plus contract to the County of Sonoma or the City of Petaluma is just a a~ license ignore cost controls. I have a very difficult time with a cost-plus and contract to a 2s governmental agency. I would have the price information released after the water agency 29 proposal was in. so Bill White - We would not accept the bid from the candidate until we had the comparable si bids and there are people in this room who know what those numbers are. If you would sz allow the citizens committee (CWAC) to come back to you with a process that will answer 33 that problem. We need some advice from the legal counsel. 'That is a process that we have 34 to resolve even they are above or below, and my point going back to one of the vendors ss would be simply say that any negotiations you do is subject to you beating the price of the 36 other guy. If you don't, it's over. We also have a timing situation here, I believe that there 3~ are other cities and counties in this eountry who are going through this process of 3s privatization. And I think the City of Petaluma is a little bit further ahead in the process. It is 39 not inconceivable to me that this could go on another 13 years. I have been on the CWAC ao for almost 6 years. I had more hair and was a very young man then. We have gone 95% of ai the process; let's just take it that last 5%. Key to abbreviations: JH-Vice Mayor Jane Hamilton, NR-Councilmember Nancy Read PH-Mayor M. Patrieia Hilligoss, MS-Councilmember Mary Stompe DK Councilmember David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt.Maguire ~ CWAC - Citizens WastewaterAdvisory Committee SCWA - Sonoma County WaterAgency y~:~.,:~~! •.,~~. . ' .: .7f .'~~!i ~t.3'' . _ ~. ~17 September 29, 1997 Vo1.31, Page 9 i MM The original CWAC recornmendation was to enter into negotiations with Montgomery 2 United Water, but they had to meet the terms, they had to meet or beat the other pnce and 3 deal with some technological questions. If the public proposal is cheaper, we have the right a to look at cost plus. s Tom Brandon, Union representative - International Association of Machinists and Aerospace 6 Workers, Local 1596 - spoke in support of U S Filter. We have 12 members there. If ~ Montgomery United Water gets the bid, we are looking at a layoff of 5 people right away. s That's a concern. U. S. Filter/EOS has worked with the City for 18 years with no problems. 9 Look at the pricing and make a decision with U. S. Filter/EOS. He has concern with the io FeC12 (Femc Chloride). A lot of companies deal with chemicals and there have been spills. ii We are not saying this company is unsafe, but it happens. We have concerns with the i2 environment, too. i3 David George, Laborers Local 139 - I wanted to speak to you on the wastewater facility ia also. From what I have read, one document says if the same proposal is ranked first in the on- is price and price ranking then only such proposai will be recommended by the staff evaluation i6 committee for contract negotiations. Our understanding is that U. S. Filter/EOS has been i~ ranked first, that making them the only choice to negotiate with. This team is labor friendly. is They have made commitments to use labor from the area. ~'his would be a plus to the i9 workers and to the community and it would keep the tax dollars here for the local economy. ~o I would like to see U. S. Filter/EOS chosen. zi Mike Stark, U. S. Filter/EOS - he has been listerung to the debate, and he has compassion for zz what the City is trying to do. If the idea was to choose the best proposal, as the gentleman zs before me said, my belief of staff and your consultants is that U. S. Filter/EOS has the best za technical proposal. If the idea was to choose the best price, then I believe your staff has said Zs that U. S. Filter/EOS has submitted the best price according to your own methodology. I z6 would like to have an opportunity to negotiate with you. We have had 18 years with you. z~ We have held an old plant in pretty good condition. We have met the discharge Za requirements. We have demonstrated we are good citizens in terms of the environment and 29 in terms of the citizenry, in terms of our participation in tlus community and if we had the 30 opportunity to negotiate with you. We would continue to be good partners. We would build si you a plant you would be proud of, a plant that met all of your technical requirements, a plant 32 that met all of your financial requirements and plant that the rate payers and the community 33 would be proud of for the next 30 years. In terms of price, I see both sides of the coin. As a 34 vendor, if I have to negotiate against a third opportunity. While T would have absolutely no 3s problem with the Council knowmg what my price is, I would prefer that the 3rd party didn't 36 know what my price was. VVhile I would have no problem witlun our proposal, I would 3~ prefer the third party did not know what the components of the price are. I would also like ss the opportunity a$er you are done negotiating with me, if new technology concerns came up 39 or new pricing concerns came up that I have the opportunity to come to the table and ao negotiate again on that basis. In summary, I'd like to say that staff and the consultant have ai chosen us, I hope you will see in your wisdom appropriate to choose us as well. We loolc a2 forward to serving you for 30 years. Key to abbreviations: JH-Vice Mayor Jane Hamilton, NR-Councilmember Nancy Read PH-Mayor M. Patricia Hilligoss, MS-Councilmember Mary Stompe DK- Councilmember David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citizens WastewaterAdvisory Committee SCWA - S°onoma County WaterAgency t f ~~ l~ . ~ O ~ Page 10, Vol. 31 September 29, 1997 i MM - called to the attention of Mr. Stark that the Privatization Act requires the City as a z body to make that public comparison against the agreed upon private proposal and that is s based on the price and the configuration so the things that you would not like to have a third a party look at is exactly what that law requires us to do. s Chibby Alloway, U. S. Filter/EOS - the way I see the 1985 Privatization Act is you have to 6 do that comparison, I think what we are saying is do that comparison after you finally ~ negotiated with one vendor or two vendors if you elect to do that. He reminded the Council s as the Council's direction, they will release the prices. We believe the best way to inform the 9 citizens of the deal they are getting, 50 years, a lot of money, is inforrn the citizens what the io price is. i i 7im Ghilotti - represents Ghilotti Construction Company - we were fortunate enough to be a i2 low bidder as a subcontractor with U. S. Filter/EOS. It means $4 Million and a couple of i3 years of a site improvement project for us. He is representing a lot of their employees who ia live in Petaluma and Sonoma County. 'The city came up with a method of handling the is proposals. Pursuant to that method, the staff and consultants have made a recommendation ~6 • of U. S. Filter/EOS. i~ One of the things I heard was that you are proposing to use the other firm because one of the ix requirements you want them to do is to meet or beat the other proposal in price and design. i9 Wait a second. U. S. Filter/EOS submitted per your own consultants and staff the lowest zo cost proposal. U. S. Filter/EOS is a known quantity to the City. It has a track record Zi operating the City's wastewater facility. U. S. FilterlEOS is going to treat the water before it ~z is released into the river or for irrigation and other uses. The other proposal won't. U. S. z3 Filter/EOS is going to use a better and more reliable method of odor control without using 2a hazardous chemical. The other proposal won't. U. S. ~'ilter/EOS is going to use lined ponds Zs to protect local ground water. U. S. Filter/EOS will always use a better method of ~6 processing biosolids than the other proposal, further eliminating any possibility of z~ contaminated run-offs. U. S. Filter/EOS proposes ponds 1/2 mile away from Lakeville while aa the other firm's site is alongside of Lakeville Highway. This is a major gateway into the City 29 of Petaluma. U. S. Filter/EOS proposes noise mitigation. ~ haven't seen any news reports 3o about problems with U. S. Filter/EOS running your Petaluma plant. It's nice to have an 18 3i year track record to show that they can run it without major problems. A major guestion sz raised by your advisory committee and some on the council was the finances of U. S. 33 Filter/EOS and that being the major factor is with them having the low price and the better 34 proposal all along why you would go to the other person and say we are going to negotiate 3s with you and you have to meet or beat their proposal was because of U. S. Filter/EOS 36 financial status. They've got a billion dollars in assets. They've got over $500 Million in net 3~ equity. Your requirement was $50. They have enough cash on hand to pay off all debt. sa They can build this plant out of cash on hand and less than their net profits from last year. 39 Those look like pretty good numbers to me. I've seen design/build processes before. Believe ao me if the City of Petaluma's own process of inethodology are followed, and more importantly ai they use a matter of fairness to these people, you're spending a lot of money, these people a2 are spending a lot of money. The city should enter into negotiations with who brought you a3 the best proposal. U. S. Filter/EOS is a California based company and U. S. owned. Key to abbreviations: JH-I~ice Mayor Jane Hamilton, NR-Councrlmember Nancy Read PH-MayorM. PatriciaHilligoss, MS-CouncilmemberMaryStompe DK- Councilmember David Kel/er, PT-Councilmember Pamela Torliatt hTM-Councilmember Matt Maguire CWAC - Citizens WastewaterAdvisory Committee SCWA - Sonoma County WaterAgency . .~.19 September 29, 1997 Vo1.31, Page 11 i If I were on the Council and somebody would raise serious questions to me if after U. S. a FilterlEOS proposed the lowest cost proposal, the best process method, the best method 3 generating the cleanest water prior to releases and for some real unknown reason they a decided to go with the second bidder and then enter into negotiations, I'd want some s answers. I am speaking for at least 30 of my people who said, why don't you go up and ask 6 that. ~ ~ MM - Mr. Ghilotti, were you here at the last sewer meeting? s Mr. Ghilotti - he read minutes and he read articles and was given a lot of data on it. 9 MM - okay I would recommend you read Bill White's statement from the CWAC. I think it io has got a lot of answers in it to your questions. ii Mr. Ghilotti - I didn't quote anything from the CWAC. i2 MM - I noticed. ~ i3 Mr. Ghilotti - there are always two opinions. ia Vasco Brazil - As he recalls, when it was first mentioned that there was going to be public is comparison with the privatization pricing. It didn't say it was going to be the County of i6 Sonoma or whomever and when that was going to happen. This is not something new to the i~ vendors. They are just trying to look for a technique to get a better handle. I personally is don't agree wifh the water agency doing it for different reasons. Both vendors are going to iv smell up, one will smell up I.akeville Highway and the other will smell up Lakeville Road. 2o If he were a resident he would want to know what the cost of something is that I was zi obligated to pay for over the next 30 years, as soon as you found out, not after you started 2z vendor negotiations. He would have expected at least three or four proposals on this project, z3 especially if it would cost me $200 Million over 30 years. We have only 2 proposals. He 2a wants to know what this projeet will cost over 30 years under public ownership. That should zs have been put up for bidding long ago. He would like to have the bid documents made z6 public. Will this start a new precedent for this council? Councilwoman Torliatt sits too close 2~ to Maguire, that's why she's got his kind of thinking. za John Barella, owner of North Bay Construction - he submitted a letter which he summarized z9 for the Council. He was born and raised in town. He has heard talk about U. S. FilterBOS 3o and the people they employ. ~Ie employs 260 to 280 uruon people, 51 of whom live in 3i Petaluma. It's a pretty good job for a site contract which he is on the Montgomery United s2 Water team. You have hard decisions to make. These are both very qualified people. Timing 33 is an issue that should be looked at. You have two vendors who have spent an awfully lot of 3a money and would like to get on with life. Both the consulting staff and the CWAC all did a 3s good job. There are different opinions that you as a Council are going to have to weigh. 36 Supports the CWAC recommendation because he is on that team. Noted that his company is s~ a umon organization company. He spoke on behalf of negotiation with Montgomery United ss Water. He went through tough times in 1989 and 90 and thank goodness for his financial 39 strength, because he is still here. If it wasn't for that he wouldn't be here. Key to abbreviations: JH-Vice Mayor Jane Hamilton, NR-Councilmember Nancy Read PH-MayorM. PatrieiaHilligoss, MS-CouncilmemberMaryStompe DK Councilmember David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citizens WastewaterAdvisory Committee SCWA - Sonoma County Water~lgency ~, ~ o -k~~ Page 12, Vol. 31 ~ September 29, 1997 i Peter Talbot, Montgomery United Water, One of the risks associated with any type of z underground construction, you never know what you may find. A knowledgeable company s like North Bay would be an asset. He agrees with his competitors on several points - a disclosure of prices which we have no problem with provided that another bidder doesn'Y s turn in a bid after the current proposals are placed on the table. That wou(d be unfair and s improper, and it is not consistent with the process. Public/private comparison, he agrees with ~ Mr. Ghilotti and Ms. Hedlund the requirement is that the City make a finding that the private s pro}ect is at least as or more cost effective than the public approach to the project. It doesn't 9 necessarily have to be done before you have your final price or after. As far as I know there io is very little interpretation available, you have to make the finding. I will leave it to the i~ attorney to define exactly what that means. Two other points, the union issue. They have ia worked together well with the union at Indianapolis wastewater plant. We routinely work i3 with the union on proposals in other parts of the country. Our company takes great pride in ia dealing with labor fairly. Regarding timing, the process has gone on a long time. We believe is this needs to move rapidly at this point. He has concerns if the process that drags out over an i6 e}ctended period ofmonths. i~ Council discussion is JH - we as a Council are unclear what the participation of the SCWA is going to. If it is i9 going to be an evaluation that is going to come at the end of us having gone through 2o negotiations, that changes the picture. That needs to be cleared up for me. zi Karen Hedlund - SCWA: not deal with et as a proposal or a bid - it is important that we zz not deal with the SCWA suggested proposal or talk about it in terms of a proposal under this a3 bid. It will not be, it cannot be. It is something that is perfectly legitimate for you to take ~a into consideration in making your finding. It will not be and cannot be a bid under this RFP, 2s but it is something you take into account at the time you go to make that comparison. You 26 can use it to help you make the determination for the finding underneath the Act. And then if 2~ you make a determination that there is no way that either of these proposals could ever come z~ cheaper than the way the agency could do it, at that point yau could decide whatever you z9 want to do, taking into account how hard that proposal is at that time. It is a little bit hard to 3o talk about something that we don't know quite what it is, and what it's going to look like, 3i and how "hard" it's going to be. Certainly it is something that you can take into s2 consideration, but you shouldn't be thinking about it in terms of it being a third bid or part of 33 this process. 34 JH - I want that cleared up. The process that we have all agreed upon prior to this is that the ss public option would be reviewed at the end of negotiation with one or two vendors. And 36 don't we also have the option of negotiation with two vendors? 3~ Karen - yes, you do have the option to negotiate with two vendors. Let me make a 3s suggestion. You are obviously struggling with the process, and we are straggling with it s9 too. We spent a lot of time talking among ourselves, Geoff and I go back and forth debating ao on this. You are in very unusual situation You have two great proposals, wonderful assets a~ for the City to have, you should feel very proud about it, proud about all the work your put az into it and all the work the vendors have put in to it. Key to abbreviations: JH-IJice Mayor ,Iane Hamilton, NR-Councilmember Nancy Read PH-Mayor M. Patricia Hilligoss, MS-Councilmember Mary Stompe DK- Councilmember David Keller; PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citizens WastewaterAdvisory Committee SCWA - Sonoma County WaterAgency ~21 September 29, 1997 Vo1.31, Page 13 i Karen Hedlund - Seeking Council directiore - You have two very strong recommendations z which are not consistent. You have staff recommendation for one proposer. You have the s committee recommendation for very legitimate reasons for the other. I am sympathetic with a Councitmember Keller's lack of comfort in making a decision to go and negotiate with one or s other, when you don't have a real sense of the difference. ~7Vhen we go into those 6 negotiations, we want to go in with as much advice from you and as much guidance from you ~ as possible on the issues. I really want to go into that room and say look, there is no way in s the world the City Council is going to approve a contract with that term in it. That's a strong 9 position, sa we want to hear from you. Xou need all the tools that you can give us for that io guidance. If you negotiate with both proposers, maybe this will take a little bit of pressure of ii the issue of pricing. Then we can sit down with them, and we'll do it as quickly as possible. i2 We won't drag it out. We won't negotiate with one and then negotiate with the other. is We're going to do one in the morning and we can do one in the ~afternoon, whatever. At that ia point we can come back to the Council and lay out the differences in price and in terms . is But I don't think we are going to get the best terms from either proposer without asking for i6 it, without the negotiation process. The negotiation process is a very valuable tool. We are i~ going to get better offers by being able to sit down with them. I suggest that one alternative is you should give very serious consideration to is letting us negotiate with both. We can do it i9 efficiently and effectively. zo Karen - I don't want the proposer whose price today is the lowest, I don't want that price to Zi be the bottom line, because my concern is that what would happen is that basically the 2z proposals would move to that price and you would wind up negotiating on everything else ~s but price. If you keep them both a little bit in the dark as to how far to come down or with Za respect to the proposer that is known to have the lower price, you don't want to let them to as feel too comfortable about where they are. That's essentially the advantage. Neither of the z6 proposers can feel that comfortable about their position now. a~ I want to keep the competitive process going. We've seen the benefit of it here. We've seen 2s sort of mini-negotiations here in this Council Chambers. We need to get down and get into 29 the negotiation room, bring a little bit of more structure to the process. Another suggestion so that we have is that we've had a lot of information going back and forth, a lot of questions 3i from the Council and the staffwith respect to the proposals. You should think at some point sz sort of say before we make a final decision on which way to go with or whether to go with 33 both or whether to go with none, you need to cut off the information, or every time you sit 34 down you're going to get more information. Xou need to rationalize the process and say 3s okay, as of this date everything you have in that's it, we'll consider it. Then we will go 36 forward and the rest will be left to negotiation. 3~ At the end of those negotiations, it would then be appropriate to reveal the pricing before we 38 made a choice. You have that information before you make the final choice. I don't know at 39 what point you are going to get the public option. You might get it next week; you might get ao in two months. We really don't know. Key to abbreviations: JH-Vice Mayor Jane Hamilton, NR-Councilmember Nancy Read PH-Mayor M. Patricia Hilligoss, MS-Councilmember Mary Stompe DK- Councilmember David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC- Citizens WastewaterAdvisory Committee SCW~1 - Sonoma County Water Agency ~ l~? 2 Page 14, Vol. 31 September 29, 1997 i MS - I am in agreement with co-vender negotiations. It wouldn't slow down the process. z Since we don't have the price component at this time, it would be fairest approach for both 3 vendors. Would you think the time line would be 2 months? a Karen Hedlund - 2 months is very doable. We could do that in less time than that. s DK - after these, negotiations is that best and final offer, or is that subject to further 6 negotiations once the numbers and the conditions are returned? ~ Karen - one possible scenario is staff comes back with what they have negotiated. You look s at it. At that point you can say go back get these changes. Following negotiation, you get as 9 far as you can go, you can do a best and final offer. When staff brings back its ~o recommendations and the negotiated contract to you, that doesn't mean you have to say yes ii or no. You can say go back and try harder. Your options are still open at that point. iz DK - are you going to give us a list of items of what you want to negotiate? is Karen - Prepare a list for the Council - that is what we have been trying to do over the last ~4 couple of weeks. In terms of the agreement terms, we have tried to spell out for you the is issues where there are differences from our original proposal and that's a pretty good list of i6 things we have concerns about. We've also listened to your concerns as well. We can i~ certainly prepare a list for you what we think the issues are. Have you look at that and tell us is what additional issues or amplifications or what kind of approach to the various issues you i9 would like us to take. so PT - we should also solicit suggestions from CWAC. zi DI~ - how do you suggest we set higher priority or lower? You're asking me to set priorities, zz if that's in fact the case. Yet we leave the priorities to staff who knows the numbers and can Zs sit down across the table and play with the numbers. We have not a clue as to what any of Za those items might cost or might ~enefit us. And so I am asking in terms of ranking those 2s priorities, what are we willing to trade off, how are we supposed to do that without numbers? z6 M11~I - you have asked this question a number of ways tonight. The best thing you can do is 2~ listen to the CWAC. I have been immersed in this for a long time and Ralph, Bill and Dan 2s have been in it longer than I have, subject to knowing th~ exact dollar price on every Zs particular technical configuration, I think this group of four people knows better than or at 30 least as well as staff, and certainly maybe better because we come. from a citizens point of s~ view than anybody. We should have a discussion about the technical specifics. Do we want 3a an earth scrubber or FeC2 or a belt press or a centrifuge? s3 DK - the major area is risk assignment I don't want to go to negotiation without knowing 34 the numbers. It boggles my mind. MIv1 - If you are going to go through this privatized 3s approach, you have a limited bracketed range of what you can deal with on that. I don't see 36 where it is significantly important at this time to put a price tag on increments of the s~ technological design. We should specify what our preferences are, give direction to staff as sg to what we want for that configuration and let them use the process drive the best bargain 39 they can drive. Key to abbreviations: JH-Vice Mayor Jane Hamilton, NR-Councilmember Nancy Read PH-Mayor M. Patricia Hilligoss, 1t~IS-Councilmember Mary Stompe DK- Councilmember David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citizens WastewaterAdvisory Commfttee SCWA - Sonoma County WaterAgency -" .A.~~ September 29, 1997 Vo1.31, Page 15 i Karen Hedlund - If the proposer who has the higher price knew what his competitor's price z proposal was, you probably would see that price brought down. My concern is that's as far as 3 it is going to go. Price is not only issue here. There are a lot of technological issues and I a could see the proposers spending far more of their time and effort trying to distinguish s themselves on technological issues or even agreement term issues than on price. 6 PT - How Councilmember Keller has been talking about needing to know price and how are ~ we going to prioritize, and how that is going to affect the negotiation process, I really see the s construction and technology driving the financing. The reason I see that is because if the 9 construction or the technology cost more, we make ourselves riskproof because we io completely reinforce a facility, or we put liners in the ponds if that is what we are going to ii require or if we are going to require more stabilization of the storage ponds areas with a i2 different type of rip-rap or we are going to move some of the significant parts of the i3 treatment facility around and pipe things around or not use FeC12 and require somebody to ia find an alternative, that's going to drive the risk component of this proposal. And so that's is why I think it is so important that we hammer down and really list through the CWAC and is from recommendations from our consultant the things we want to see, put apples to apples, a i~ bid type process. We didn't start out that way, but we've gotten the best bids by two is companies and they come almost identically back to us, except for two real components of i9 the treatment process. I think it will be pretty easy for us to clarify what we want for a Zo process and say okay who is going to give us this plant for this dollar amount and let Karen 2~ go in there and try and negotiate the best deal. When we come out of that process, I want to 22 know what the original bids were, I want to know what the negotiated bids are and I want to 2s know what the public model is so we can compare those things. I am not going to go in the za dark and make a final decision on this treatment facility without everybody knowmg from day zs 1 to the last day what the numbers were. Zs NIM - thank you Councilwoman Torliatt, you summarized it very nicely. The only thing I z~ might add is that if it makes you feel more comfortable we could ask staff to do their best zs estimate to figure what a public biolac plant would cost to give us what the bids are as a 29 percentage of that figure just to give you a bench mark. Details of plant technology we want 3o to discuss and pin down and use as marching orders for the consultant to negotiate. I'd be si willing to direct staffto give us something. Or take the lower bid, call it 100% and say okay 3z what's the higher bid, 105%, 120% whatever it is so we would know the relationslup. 33 DK - I would a~so want to know how it compar~s to our existing sewer cost. 34 ~Iargis - we aren't prepared tonight to give number, if you give us direction of how if you ss want to see the numbers, the bottom tine, net present worth, difference in dollars, we can 36 structure it most any way you want. s~ PT - Are we all agreeing that we are going to wait for the Farnkopf report? Is the Council in ss agreement that we are negotiate with 2 vendors? Should we know from Karen how long this 39 process of negotiating should take? ao Karen - the negotiation should take 2 months or less with 2 vendors. All it depends on is the ai time they are willing to spend here, and how sticky the negotiations get, but it should take az more than 2 months. Maybe we can do it in substantially less time. ~Ve have already had a 43 lot of negotiation in a sense on the documents. Key to abbreviations: JH-T~ice Mayor.~'ane Hamilton, NR-Councilmember Nancy Read PH-Mayor M. Patrrcia Hilligoss, MS-Councilmember Mary Stompe DK Counci/member David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citizens Wastewater Advisory Committee SCWA - Sonoma County Water~4gency ~ [> ~ "`:A ' ~S ~r Page 16, Vol. 31 September 29, 1997 i Karen - And the technological issues are fairly clear. So that it's not like we are starting from z scratch with a proposed document prepared by counsel for one party. We have thrashed out 3 a lot of issues, we have had a good give and take session with them. a PT - then we are going to agree that the staff and the CWAC are going to give us s recommendations on what technological things we want changed and contract issues, so we 6 can get a recommendation from those two people so we can rn~ke a decision up here. ~ MS - I would feel much more comfortable with everything that is proposed that is on the g table right now if we could negotiate with both vendors. 9 N1M - if we do decide to go either 2 vendors, my main concern is that there have been io significant offers that differ from each vendor that have been made in the process I would like i~ to be sure that we give both venders a full, fair opportunity to again revise and some change ia in their offers. i3 JI~ - Is there agreement on the council to negotiate with both vendors. ia NR - VVould you please find out if both are interested in negotiating simultaneously? That is is the first question that has to be asked. i6 Talbot of Montgomery United Water - simultaneous negotiations without consulting our i~ management team, all I can say is we have severe reservations about that. is DK - what are the nature of those reservations? iv Talbot - the length of the process, the nature of the negotiating teams, the composition of the 2o negotiating teams on both sides of the table. Two of the things that, I suppose one way of Zi putting it, it's on the record with respect to how the staff came out on the evaluation, maybe 22 the suggestion should be we should negotiate with the CWA~. I really can't speak to the ~s issue without some internal discussions. za 1Vlayor - how 1ong, timewise would it take to get us that information? zs Talbot - probably a day or two. 26 U. S. Filter/EOS - Stark - we would consent to negotiating simultaneously. We would like 2~ to participate in the process. If you want our best and final offer, I believe you would get our ~a best and final offer at the negotiating table: z9 DK - if negotiations happen at the table, are you amenable when you are finished at the table 3o with staff and whatever the consulting team is that is part of the negotiations team, would 3i you be amenable to still make any revisions when it was finally revealed to public and had a 3z chance for public scrutiny and council scrutiny with the numbers? Key to abbrevfations: JH-Vice Mayor Jane Hamilton, NR-Councilmember Nancy Read PH-Mayor M. Patricia Hilligoss, MS-Councilmember Mary Stompe DK- Councilmember David Keller, PT-Councilmem8er Pamela Torliatt M1LI-Councilmember Matt Maguire CWAC - Citizens WastewaterAdvisory Committee SCWA - Sonoma County WaterAgency ~ .~ :- ~ 3~5 September 29, 1997 Vo1.31, Page 17 i U. S. Filter/EOS Stark - within reason, if there are some issues that council feels having 2 negotiated a contract, if there are some issues the council would like to discuss and explore 3 and possibly amend, certainly. If you are a partner with somebody for 30 years, the whole a purpose the document is to be a living document and something both parties can live with. It s would be a shame if you entered into an agreement with aspects of that agreement not being 6 to your liking from the start. ~ Stark - U. S. Filter/EOS - Partners work together through all sorts of issues and over the a next 30 years there are going to be a lot of them. So Councilman Keller we will be amiable 9 to changes for next 30 years that are in the interest of the City of Petaluma and to the rate io payers. ii JH - Can we be assured of fair negotiations? - Talbot brought up a pretty pertinent point, i2 given that staff and consultant have backed one recommendation, how are we as a Council is assured of a fair negotiating process that doesn't just reinforce the recommendation that's ia already been given. I want to hear about that. ~s Hargis - Staff commitment to fairness - I would like to put my perspective on this. The i6 staff and the consultants did not choose or recommend a vendor team. We evaluated two sets ~~ of proposals, using the methodology that the City Council approved. We made our is recommendation one and two on two criteria to the CWAC which was then brought to you i9 the Council. We did not choose, we evaluated, and I will commit myself, I can only talk for Zo myself, but as your staff we have to be objective on this. If there is any prejudice I have it Zi towards getting a new sewer plant and the best deal for all of us. I have worked extra hard z2 myself to stay objective in this process. That is my commitment to you, that I will continue 23 to do that. We have consultants who assist staff in the evaluations. They tried to point out za issues to us, to the CWAC and to you, the Council, on the differences in the proposals. I zs think you have heard in the past both proposals have tremendous merit. Both proposals z6 when you look at the scoring met all the minimum criteria and tried to put things in a relative 2~ rate. If there is a concern on that then we need to make sure that we have a negotiating za process that continues the openness, the public involvement, the fairness kind of issues as 29 much as possible. I am very concerned that we continue with what we have made 3o tremendous strides on getting to so far and Karen may want to address that also. 3i Karen Hedlund, Nossaman Guthner - Attorney commitment negotiate without prejudice - 3z we analyzed differences in the agreement. We did not make recommendations of one party 33 over the other. We were not involved in allocating points in terms of the evaluation between 34 one party or another. I can assure you I could I could go into negotiations with both parties 3s without any prejudice in favor of one party or the other. The consulting team would be staff 36 and consultant team. We will be primarily taking a lead on the agreement points, but there is s~ a lot more than the agreement to be negotiated in this contract. 38 I~IlVi - Was hoping the council could have the discussion with staff of the technological 39 presentation. The CWAC has been through that. Staff used the methodology that was ao established and the consultants used their comparison. The CWAC used both the ai methodology and the analysis of using our intuition, experience, et cetera, and I think maybe az the thing to do is to send this back to the CWAC so we can summarize the list. Then make as the choice as to which vendor to proceed with. Choosing a single vender is much cleaner aa process. It works well in terms of negotiating the kind of deal we want. Key to abbreviations: JH-Vice Mayor Jane Hamilton, NR-Councilmember Nancy Read PH-MayorM. Patricia Hilligoss, MS-CouncilmemberMary Stompe DK Councilmember David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citizens WastewaterAdvisory Committee SCWA - Sonoma County WaterAgency ;, , ~ - 1~6 Page 18, Vol. 31 September 29, 1997 i MM - Out of that vendor when the vendor knows that there is a backup vendor there, who is 2 more than willing to step in and negotiate if the first vendor doesn't come to agreement. It is s those technology points some of the financial points, those things that really that we want to a discuss before we choose the vender. s MS - in fairness to both venders, because one of the vendors has asked for additional time, 6 that if we could schedule this for our next meeting and then go ahead and take action that ~ evening, just so we give ample opportunity for response. I would like to go forward with s both vendors. 9 1Vlayor - suggested Friday, but several Councilmembers would not be able to attend. io PT - Want to make sure that this negotiation process doesn't go on forever. And I want a i i definitive amount of time that we are going to allocate to it and then get a status report back ~2 from the attorney so we know if we are almost done or if it is never going to happen or what is so maybe we can get that status report at the October 6 meeting. Is that doable, are we ia going to be able to schedule negotiations? is JH - if one of the vendors doesn't want to go into negotiations with two, then we make a i6 choice. i~ PT - if they are going to say, `yes,' then we don't have to make a decision and we can go on is with the negotiation process. If we get a negative answer that's when we get to have it on i9 our agenda. Zo MS - agrees zi Karen - ItFP stipulates simultaneous negotiations may occu~ - regarding simultaneous 2z negotiations - It is appropriate to take into account their concerns about how the negotiations zs are structured to assure that they are fair. But in terms of whether or not they agree to za simultaneous negotiations, that was a term of the RFP and I don't think they've got a choice. Zs MM - does the Council want to hear input from the CWAC on the details before we make 26 this decision. z~ MS- it sounds like a majority of the Council would like to proceed with negotiations with ~s both vendors and I would be important to have another scheduled discussion to get all the z9 specific we vvant included in the negotiations with both vendors. So it we could scheduYe that 3o discussion, it is incredibly important. 31 32 33 34 35 It was moved by MS and seconded by NR move that we begin simultaneous negotiations with both vendors; that we schedule a discussion as soon as possible for the council to review specific things that we would like in the terms of the negotiations. Schedule for October 20 after the Farnkopf report is received. (It would be nice if it went to the committee.) Key to abbreviations: JH-vice Mayor Jane Hamilton, NR-Councilmember Nancy Read PH-MayorM. PatriciaHilligoss, MS-CouncilmemberMaryStompe DK- Counci(member David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citizens WastewaterAdvisory Committee SCWA - Sonoma County WaterAgency ,., ~ 12 7 September 29, 1997 Vo1.31, Page 19 ~ Council discussion on the motion -(PT - I would like to get a definitive time allotment of z what we are going to allow the attorney to go ahead and negotiate for how long of a period, s be it 8 hours, 10 hours, 15 hours, and then report back to us. Karen Hedlund - what we can a do for you is draft out a proposed schedule for negotiation and there is no reason why we s can't tell both parties we are going to have 3 or 4 rounds of negotiations, and as of "x" date 6 is all over. That's all you get, there is no reason why we can't do that. It would be an orderly ~ way to do it in any event. s Continuation of Council discussion on the motion - MM - so this is with the understanding 9 that any revisions they want to make to their proposal, whether it be financing technological io whatever this is the opportunity to make it. Is that what the council is saying? MS - I am i i hearing that we have to give a specific cut-off date. Karen Hedlund - you don't have to, but iz if you want to do that, that's what we can do. We can tell the proposers we're going to have i3 negotiating session on "x" date. We are going to turn the document two or three times, ia whatever, and that the staff objective is by "y" date to make a deternunation and bring a is recommendation back to the City Council. MM - let's back that out timewise. We want to i6 hear from Farnkopf. We want to hear back and discuss the details of the technology and the ~~ things the advisory committee and staff will list out, such as do we want FeC12 , do want is liners, and so on. MS - would we accomplish that all on the 20th of October? MM - I'm ~9 thinking the way the comple~ty of these meeting has been is that I think we should allow ~o ourselves to get that information, because the citizens committee has to meet within the ne~ct Zi couple of weeks, and that is always a challenge to coordinate those schedules. I don't want z2 this to take a second longer than it has to take, but for due process we may have to look at zs going into November. November 3? Hargis - we'll do as much as we can, as quickly as we za can. We will try and get the Farnkopf report here for the 20th and as much information as Zs we can put together with staff and consultants. Schedule with the CWAC. It make take a 26 couple of ineetings of the CWAC to get it put together. We would get it back to you as soon z~ as possible. It may be November 3 that is going to work, rather than October 20, but let staff Zs do as much as we can as quickly as we can. MM - maybe we should look at November 10 as 29 additional follow-up time. JH when this comes back, in order for us to move through our 3o discussions, we need the decisions delineated for us very clearly, what our choices and what 3i decisions we are trying to make in an organized manner to assist the Council, because we all 3z tend to have these rambling conversations. VVe need a strong hand in helping through the 33 decision-making process. Hargis - we will try to provide as many road maps and guidance. 34 Also staff already has questions that we are generating answers to for the Council. We need 3s to get you that information you have asked for so you have time to digest that also. MM it 36 will be up to staffto bring it back as fast as possible. NR I am going to be voting for this but s~ for the wrong reason, because I can't choose one vendor without knowing what the costs ss are. MM I am going to vote against it for the same reason. DK I am going to be voting 39 against it ao ai a2 because I don't want to go into negotiations without knowing thE Ayes: Read, Stompe, Torliatt, Vice Mayor Hamilton, Mayor Hilligoss Noes: Keller, Maguire Absent: None : number.) as DK - The council has been receiving anonymous letters, if somebody has information they 44 would like to pass on to the council or to staff put you name on it so we can question it, we as can find out your sources, validate them. Key to abbreviations: JH-T~ice Mayor Jane Hamilton, NR-Councilmember Nancy Read PH-MayorM. PatriciaHilligoss, MS-CouncilmemberMaryStompe DK- Councilmember David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citizens Wastewater Advisory Committee SCWA - Sonoma County WaterAgency ~.~8 :;,, Page 20, Vol. 31 September 29, 1997 i CAMP, DRESSER, McYZEE and z NOSSAMAN, G~1T'HNER, KNOX, ~LI~IOT'~' 3 This is the discussion about the proposed amendments of contracts with Camp Dresser a McKee and Nossaman Guthner Knox & Elliott. s DK expressed concern about the amount paid for litigation, not including the City Attorney 6 costs, on the Press Democrat case which to date is $33,500 to Nossaman, Guthner and there ~ is more coming because they have appealed. He can find a lot of things to spend $33,000 on s plus what Mr. Rudnansky has spent. There is no indication how much was spent on 9 petitioning and the conversations and the meetings with the PUC to change the procedures at io the PUC regarding the Privatization Act which he doesn't believe had been authorized by the ri Council. It is not listed as a separate item. i2 Geoff Yarema, Nossaman, Guthner. I haven't talked to the Council this year, but he has been is on retention for the last 4'/Z years. It's been an honor to be of service. Our reputation is ia based entirely upon recommendations and cost effectiveness. Since we did our initial is breakout and your question came up about the Press Democrat litigation, we went back i6 mostly to look at that. The initial cut we made was not as precise as that. Our more precise i~ cut at the expenses on the Press Democrat litigation was about $24,000. The difference is i~ allocable to the $23,000 that was done for Tasks 7 through 10. The meetings with the i9 proposers and the CWAC and the proposal evaluations January through May. zo DK That is a hell of a lot of rate payers' money to spend to keep information from the public, 2i with more coming. 22 Geoff~'arema - nothing we have done is without express direction of city staf~ I'd be happy z3 to go over those sheets to review them for you. aa DK - Suggested amendments to the contracts - on the proposed scope of services, there is a ~s requirement that should be changed, E~ibit A, Page 1, Attachment C- first paragraph, the z6 scope of services to be provided to Camp, Dresser, McKee "..to assist the City of Petaluma ~~ in completing the procurement of a service contract and ground lease for the private zs development, ownership and operation of the new wastewater treatment facility." Essentially 29 the legal obligation under this contract is to assist in privatization of this operation. Your 30 legal obligation is not necessarily to provide for an equivalent analysis and equivalent 3i judgment of public ownership versus private ownership. Both firms have been under contract s2 to assist in privatization. That is a serious flaw in the consulting senrices. It reflected itself in 33 the kind of discussion that happened at the CWAC in January and February regarding the 34 approach to charging fees. The information that was given to DK at the time was, "sorry we 3s are biased in this direction, that's our job, and if you want an equivalent analysis of another 36 approach, you'll have to elsewhere to get it. LTnfortunately I didn't get that." That was a 3~ quote from Ted Richie. It was an aside to DK when he asked for staff be providing an 3s equivalent analysis of a cost-based approach to rate setting. Key to abbreviations: JH-Vice Mayor.lane Hamilton, NR-Councilmember Nancy Read PH-MayorM. PatriciaHilligoss, MS-CouncilmemberMaryStompe DK- Councrlmember David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citrzens WastewaterAdvisory Committee SCWA - Sonoma County WaterAgency ~~~ 12~ September 29, 1997 Vo1.31, Page 21 i Geoff Yarema said that his firm has no bias one way or the other. 2 Both amended contracts should include phrasing something like, "the scope of services to be s provided to the city is to assist the city in completing procurement of a new wastewater a treatment plant to provide the best results to rate payers and utility customers whether s privately or publicly owned, operated, designed, built or financed." So the agreement says 6 that you are here to help us get the best job. ~ NR - one of the scope of services rationale is to identify what you need done and assign an s amount of hours to and it is agreed upon, if in fact that was the methodology used, how did 9 we get to here that we didn't expand the scope of services and they went on their merry way io and now we are coming back and trying to clean it up. Once we clean it up, how are we i i going to prevent that from happening the next time as we go into Round 2? i~ Ban - We don't know how we got to where we are here, but I am responsible for this i3 contract now, and this kind,of thing is not going to happen. We have asked both of our ia consultants to task base invoicing to us. So in their contract it is going to say how much each is task they are authorized for and in their invoice to us they are going to say how much they i6 spent on that particular task. That's going to allow us to track these costs a lot closer. If we i~ get close to the authorized amount, we are going to work with our consultants and ask is what's going on, see if there have been any changes, and before we reach any authorized ~9 amount, we will come back to the Council. If there is anything else the Council would like us 2o to do today, please let me know. zi PT - also expressed surprise at the Press Democrat suit cost. If we are involved in any zz litigation, that we are kept apprised of what the services are costing us as far as our attorneys Zs go and not receive something after the fact where it is $33,500 versus now we are looking at za again it's $24,000. That's an important thing for us in closed session, not just with sewer 2s water, but with any of the pending litigation that we have. 26 DK on Task 2.7 Camp, Dresser & McKee (original scope of services) language persists 2~ through `additional services' - City Council approval prepare for and attend a meeting of as City Council to support City Staff in obtaining Council's approval of the highest rar-kmg 29 proposer for contract negotiations." That ties the firm in with staff, and DK is concerned that so the firm works for the Council, not for staff. The way this language reads, and it reads in si several other places as well in that same kind of language is that DK wants the firm to 32 responsible to the Council. He doesn't want the contractor there as boosters for staff. ~Ie 33 wants the contractor to give the Council straight information. If you happen to disagree with sa staff, or have varying opinions, one of the things that was astonishing to him during the ss proposals during the presentaiton of staff and consultants information it was notoriously 36 uniform. He was wondering if people are thinking exactly the same way or has stuff been cut 3~ out. Where is the disagreement? Where are the differences in opinion? Where is the 3s differences in approach. He didn't get it. He is sorry to see that it left the presentation 39 somewhat flat and somewhat one dimensional. And maybe this is why it was that way to ao support city staff in obtaining city council's approval. Maybe that kind of language needs to ai be loosened up so you have the prerogative under your contracts to give us direct az information without having to filter it through staff's preferences. Key to abbreviations: JH-Vice Mayor Jane Hamilton, NR-Councilmember Nancy Read PH-Mayor M. Patricia Hilligoss, MS-Councilmember Mary Stompe DK- Councilmember David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citizens WastewaterAdvisory Committee SCWA - Sonoma County WaterAgency ~ ~.~o . . Page 22, Vol. 31 September 29, 1997 i PT if that is the way the language is reading in the contract, Mr. Talbot who talked about his z reservations before when we were discussing the previous item about who the attorneys that s we are hiring are necessarily working for whether or not they are supporting what the staff's a recommendation was pursuant to the evaluation criteria, that specifically states that you are s supporting that and you are not necessarily looking at it as a third party and a person that is 6 impartial per se. ~ MS - that question was asked what our legal counsel told us is they didn't specifically s recommend one or they other, they analyzed the contract. I feel it is appropriate we could 9 change the contract, but I certainly the question was asked and answered by counsel. ~o JH - I would like the language in this contract changed. I did take exception to it. ii DK - there is another place that concerns him in the revised proposal from Camp, Dresser & ~z McKee, Page 2, Task 3.1 on the top of the page, review and comment on Hilton Farnkopf i3 and Hobson's work product resulting from its review of draft privatization agr.eement and ia from its review of the proposed financing approaches of the proposals. Does that mean that is we are also saying to Mr. Farnkopf that he can comment within his scope of his services he i6 gets to comment back on these comments? This goes to the heart of one of the reasons that I i~ wanted somebody like Mr. Farnkopf hired is because frankly I did not believe and did not see is sufficient evidence that Camp, Dresser & McKee and Nossaman Guthner were adequately i9 paying attention to the needs and protection of the rate payer. There are a number of things zo m the original documents that were evidence of that.~ He is concerned that we are going to zi pay Camp, Dresser & McKee and probably Nossaman Guthner to review and comment on 22 Hilton Farnkopf. What is it that we want? He doesn't want Mr. Farnkopf come up and zs present his presentation and then get undercut and not be able to respond because his za contract doesn't say he can respond to Camp, Dresser & McKee. Zs MM we have asked for a different viewpoint and I would expect as responsible consultants if 26 you saw a red flag you'd let us know, but I don't want to spend money getting a full blown z~ analysis of NIr. Farnkopf. as P~' shouldn't we at least have the attorneys read what Mr. Farr-Icopf presents. z9 DK - absolutely, Mr. Farnkopf needs latitude so that he can participate in a peer discussion 3o MS - maybe what the best thing to do here is to bring back the agreement with the proposed si changes, because a lot of changes have been proposed. s2 DK - on Task 11 on the extended scope of services, develop list of issues from proposal for 33 clarifications and staff and CWAC evaluations, wants City Council included in that loop. sa References on the same page to receive internal comments, revise and distribute first draft to ss all parties. Who are they and is the City Council one of those parties? I want to be informed. Key to abbreviations: JH-Vice tl~tayor.lane Hamilton, NR-Councilmember Nancy Read PH-MayorM. PatriciaHilligoss, MS-CouncilmemberMaryStompe DK- Councilmember David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citizens Wastewater Advisory Committee SCWA - Sonoma County WaterAgency 13~ September 29, 1997 Vo1.31, Page 23 i Ban - the peer review, staffwould still like Camp, Dresser & McKee to still do a peer review, a with Mr. Farnkopf present. s PT on Line 21, 22 of the proposed resolution, it says an associated cost for an additional a$164,170 for financial assistance. Should that be legal assistance? s Bank - that is Camp, Dresser & McKee and Financial Management's contracts. We can 6 change the wording of the resolution to reflect that. ~ Vasco Brazil - I haven't had any discussion with any of you on this item. I am glad you are s concerned how the lawyers and consultants are spending money. He says there is new 9 combined future service estimate of $202,910, which comes $684,160 for "so called" io invaluable legal and financial assistance to the City to procure a new wastewater treatment ii plant for sewer rate payers. ia l would wonder a lot, if I were a City rate payer about the following: both companies have is high credentials yet they cannot predict the cost within a given range at the beginning of the ia process to avoid later sticker shock to the customer. One would expect the contracts to have is a cap on costs, alert the customer to services not covered in the contract being performed and i6 would promptly alert the customer of this condition as it should for overruns before they i~ occur. He wonders also about City staf~s responsibility in this regard. Having City is Department heads negotiating contracts would also worry him. If I were a rate payer I i9 would not vote for any of you running for office in 1998 should you approve the $202,910 2o for future services for these consultants until it is decided that a new private plant at the 2i ponds which reduces pond storage capacity will increase the future need for a storage 2z reservoir. Increases rate payer risk for seismic and seepage environmental improvements cost zs to the ponds is better and cheaper than modular expansion to 6.7 mgd with tertiary upgrading Za of the e~cisting publicly owned plant which in the past 6 months has only had one TSS Zs exception reported by the plant manager to the regional board. 26 a~ At 10:30 p.m., the Council adjourned. Za 29 30 31 32 33 ATTEST: 34 35 36 ~~L -' ' _~ V ! s~ Patricia E. Bernard, City Clerk. ADJOi1RN Key to abbreviations: JH-Vice Mayor Jane Hamilton, NR-Councilmember Nancy Read PH-il~fayor M. Patricia Hilligoss, MS-Councilmember Mary Stompe DK- Counci/member David Keller, PT-Councilmember Pamela Torliatt MM-Councilmember Matt Maguire CWAC - Citizens Wastewater ~l dvisory Commfttee SCWA - Sonoma County Water Agency .,:~ ~~~ : 1 ~ 2